Unit 21: All public companies face the permanent risk of takeover bids. Is this a good thing for business? What are arguments in favour of and against takeovers and buyouts?

Successful companies have to find ways of using their profits. Sometimes they develop products and services, enter new markets, but sometimes it is easier to take over other companies with existing products and customers.

We can name 4 types of integration:

1. Horizontal: acquiring a competitor in the same field of activity gives a larger market share and reduces competition

2. Vertical: acquiring businesses involved in other parts of one supply chain in order to achieve cost savings

3. Backward: acquiring suppliers of raw materials or components

4. Forward: buying distributors or retail outlets

A takeover bid is a public offer to a company’s stockholders to buy their stocks at a certain price (above the current market price) during a limited period of time/

Reasons for takeovers are: creating economies of scale, developing synergies, cross-selling, diversification, increasing market share.

On the other hand, takeovers can lead to the formations of large conglomerates. It can become a contrary phenomenon: leveraged buyouts. It is when a series of takeovers has not achieved synergy and has become inefficient. In other words, the conglomerate’s market capitalization is lower than the value of total assets, including land, buildings, pension funds etc.

Unit 22: Discuss government spending and taxation. Could these activities – sale of alcohol, drugs, guns, education, healthcare and working conditions - be left to the private sector and the market system in Russia?

Is there a flat rate tax in Russia or is it progressive? Which system do you prefer?

Out government spends a huge amount of money every year. In every society governments provide such services as national defense, police, firefighting services, and the administration of justice In addition, governments make transfer payments to some members of society. Transfer payments are payments made to individuals without requiring the provision of any services in return. Examples are social security, retirement pensions, unemployment benefits, and in some countries food stamps. So where does this money come from?

Government’s expenditure, whether in the provision of goods and services (defense, police) or on transfer payments, is chiefly financed by imposing taxes, although some residual component may be financed by government borrowing.

There are different types of taxation. For example, income tax on their earnings, value –added tax, indirect tax. Many countries operate a system called progressive income tax. Under this system people with a higher income pay a higher percentage to the government. Taxation however is not only a way for government to earn revenue. It`s also a way to make the income gap between the rich and the poor smaller.

Some people argue that too much regulation is bad for business and that governments interfere with “market forces”.

To my mind education and health care can`t be completely left to the private sector. It is very important that there be common standards in these two areas. Moreover, people with low income may not be able to spend money on that service. However, it`s a good situation when people have a choice between private and public medical and educational institutions.

What is about sale of alcohol, drugs, guns, in my personal opinion, than more restrictions, than more people prefer to buy restricted goods. However, this idea is only good in theory. I do not think that the Russian people are ready for such changes. Working conditions should be regulated only by the government to protect people from exploitation. Now there is a flat rate in Russia. As a prospective entrepreneur I prefer flat rate, because to my mind progressive income reduce the incentive to work.